Ownership

Ownership

A year ago in this report, we outlined how arguments reaching back nearly a century, about what models of ownership of media were best, had suddenly intensified.

The progression from local owner to chain and from chain to publicly traded company was fueled by growth. Going public and getting bigger allowed media companies economies of scale and gave them cash to invest — for more reporters, more presses, more papers, more TV stations.

Later, when companies like Tribune, Times Mirror, the Washington Post and others, went public, they bet in effect that they were so profitable they would be immune from many of the conventional pressures of Wall Street. That bet looked solid for a while.

And even as the business fundamentals changed in the last decade, media companies were able to manage the decline. Critics complained that the companies were “eating their seed corn,” by failing to invest in the future, but managers countered that they had to make a profit and operate in the real world. Whatever the long-term implications, business was good.

Yet the argument that journalism was more than a business, that it had some larger public-interest obligation, began to fade. What could not be justified financially, quite simply, could no longer be justified. The media business felt it could no longer afford it.

Now, there has been a new turn in the debates over ownership. Starting in 2005 and accelerating in 2006, there have begun to be questions not only from journalists but now from corporate managers and investors about whether the dominant model of media ownership, the public corporation, is still preferred. And the questions are no longer simply moral ones.

Companies that rode the wave of deregulation and consolidation, such as Clear Channel, went private in 2006. The radio giant also began to divest and get smaller. There was more sales activity in local TV than in years, properties that at the moment can command high prices. Newspapers are losing value, and the percentages are staggering. The Minneapolis Star Tribune was sold to private investors for half of what McClatchy paid for it eight years earlier. The New York Times wrote down the value of the Boston Globe by 40%.

What model might replace the public corporation? That is in much more doubt. Philanthropies have had talks about whether they should get involved. Already charitable funding of the news, sometimes with pointedly political motive, has become more of a factor in financing particular stories, but not yet in owning media. Private equity firms have become more active. So have wealthy magnates like the record mogul David Geffen, the former General Electric boss Jack Welch and real estate magnate Eli Broad. But look more closely. The list is so diverse it represents uncertainty, not a direction.

The Federal Communication Commission decided to reopen talks about relaxing ownership rules, a step it tried and failed to put into effect in 2003. Liberals like the FCC commissioner Michael Copps want to push in the other direction. He told a panel at Columbia University in early 2007 that the country should not only re-impose the regulations junked in the Reagan years, including tighter ownership caps, the Fairness Doctrine and Equal Time rule. He also wants to impose new rules, perhaps for print as well. Whether or not there is now a constituency for that on Capitol Hill, few would have wasted their breath on such a campaign a few years ago.

The one thing that can be said with certainty — to a much greater degree than was true a few years ago — is that the notion that a diverse public corporation is best suited to have the wherewithal, resources and experience to manage the future of media is no longer gospel. The concept of the media conglomerate, in that sense, has been put into play.